A run for my search money
Last week, I was given a run for my search money. The place was Nashville. The time was about an hour before cocktails flowed. The presentation was a primer, a deck I knew like the back of my hand. I could even predict the exact questions that each slide would elicit. Needless to say, I wasn't expecting to find my back against the wall.
In a conversation earlier that day, a conference attendee had relayed her experience with search: "I've never seen search deliver a negative ROI." At some point during the presentation, I decided to share this statement. This is when it all went down.
What I had not expected was that within this crowd of beginner and intermediate search marketers, there were a handful of hardened veterans. These were people who had experienced the victory of being a first mover during the 5-cent-on-overture days and the defeat of ending up on page two during intense competition.
"Paid search does not always work," said an attendee. Forever the optimist, I ran through a short list of possible tactics: explore the long tail, readdress copy, optimize landing pages and so on. The attendee was firm in his beliefs. "I've been doing this for seven years. There are so many competitors that it is no longer profitable for me to be on the first page." I ran through some more advanced tactics, but with no avail. This was a man I needed to catch up with during the rapidly approaching cocktail hour.
His name was Kevin McKenna. As president of The Credo Group, both an agency and agent for the insurance industry, he laid out a scenario that seems to be a growing trend. In short, search used to be a boon for smaller firms with a tight ROI expectation. The keywords were cheap, there were no barriers to entry and the big guys were oblivious to the medium. Over time, this changed as keyword prices inflated and the competition wised up. "Have you tried playing the long tail?" I asked. His answer was quick: "One person's long tail is another person's sweet spot," suggesting that every derivative is, in fact, the starter term for some business.
He walked me through a quick example. The term "juvenile life insurance" might seem rather obscure to the average search marketer, yet that product is being widely touted across the engines. "I used to buy that word, but now I don't," McKenna said. Why? It's no longer profitable for him to be on the first page. For some keywords, he might make the decision to bid less and drop to the second page. So what is the sum game? "It doesn't mean that we don't do search, or that it doesn't work. It's a smaller percentage today," he added. "It is not as effective as it was three [to] four years ago. We used to convert 50 percent of the people, now it is 30 percent. Nothing has changed in the industry." Nothing, except for the fact that more people are using search engines.
Perhaps more troubling is the fact that six out of the ten companies bidding on McKenna's terms don't even sell the product in question. As might be expected, these are the companies with extensive brand equity and brand dollars. I discussed this classic clash between marketing silos with Bryan Wiener, CEO of 360i. As the early adopters of search engine marketing, direct response teams had a hard and fast ROI to achieve. "Every bid was rational," he said. No one in their right mind would spend more than necessary to achieve a conversion. That is, until brand dollars realized that first page, first place visibility on a search engine just might increase awareness. Suddenly, brand marketers started pricing the direct marketers out of the game.
So what would make this better? The most immediate fix is to the engines' PPC algorithms and human policing. Firms with brand equity are more likely to have a high click-through rate, though they neither offer products related to the keyword nor have copy or landing pages that express otherwise. In the meantime, search marketers must learn to roll with the medium's evolution in the marketing mix. "This isn't unique to search," said McKenna, as we revisited the ups and downs of television, print and radio. A smart marketer, he feels, only spends when there is a return.
The greatest challenge, however, is learning how to operate in an intensely competitive field, where brand dollars and direct marketing dollars are being funneled toward the same medium. Given that search engines are blind auctions, one can never know what is happening on the other side of the dashboard. As McKenna says, "You are as smart as your dumbest competitor."